STRESA: US Treasury Secretary Janet Yellen told Reuters that European banks face growing risks operating in Russia
and the US is looking at strengthening its secondary sanctions on banks found to be aiding transactions for Russia’s war effort.
“We are looking at potentially a tougher stepping-up of our sanctions on banks that do business in Russia,” Yellen told Reuters in an interview, declining to provide specifics and not identifying any banks at which they could be
aimed.
Speaking on the sidelines of a G7 finance leaders meeting in northern Italy, Yellen said that sanctions related to banks’ dealings in Russia would only be imposed “if there was a reason to do so, but operating in Russia creates an awful lot of risk,” Yellen added.
Asked whether she would like to see Austria’s Raiffeisen Bank International, opens new tab and Italian bank UniCredit, opens new tab pull out of Russia, Yellen said: “I believe their supervisors have advised them to be extremely careful about what they do there.”
European Central Bank (ECB) policymaker Fabio Panetta had clear instructions for Italian banks on Saturday telling reporters that lenders must “get out” of Russia because staying in the country brings a “reputational problem.”
Raiffeisen is the largest European lender doing
business in Russia, followed by UniCredit. Another
large Italian lender, Intesa Sanpaolo, opens new tab is working to dispose of its Russian business.
US President Joe Biden’s new secondary sanctions authority gives the Treasury the power
to cut off banks from the US financial system if they are found to be assisting the circumvention of primary sanctions against Russian and other entities over Moscow’s war in Ukraine.
Yellen and other US Treasury officials have said that Russia’s economy is increasingly a “war economy” making it more difficult to distinguish between civilian and military or dual-use transactions.
The existence of the secondary sanctions has already chilled banks’ engagement with
Russia, but Yellen has expressed concern that Russia is managing to find avenues to acquire goods needed to boost its
military production, citing transactions through China, the United Arab Emirates and Turkey.